Budget 2024: The day the roof caved in

You’ll have seen several takes on Jeremy Hunt’s budget already I’m sure, I’m going to focus on the built environment. You know we’ve got a climate emergency, a cost-of-living emergency, it’s also the case that we’ve got a public sector buildings emergency. There’s a massive repairs backlog for schools, hospitals, council houses, prisons, police stations, fire stations, MoD estates, leisure centres, law courts and minor roads. There’s a scarcity of public buildings too, we need to build lots of new ones, as well as repair the ones falling apart.
When Boris Johnson ascended to power I was struck by how awful his construction record was, within weeks of becoming London Mayor he cancelled the Barking Riverside rail link that effectively killed off development in the Thames Gateway. He proceeded to back a number of hare-brained schemes such as the Scotland-Ireland bridge, Cross-channel bridge, Garden Bridge and Estuary Airport that were never going to be built and put his name to necessary projects such as the Bakerloo Line Extension but actually failed to sign off as Prime Minister. Johnson is a tough act to follow in terms of sheer uselessness, but somehow Sunak and Hunt manage it. What little investment that is planned is on the wrong things and in the wrong places. Let’s take a look at a few key sectors . . .

Housing
Bigger picture: Britain built seven million council houses between 1919 and 1979. Since then we’ve stopped building council houses, sold a load off, and demolished a lot, now there are only four million social houses in total (council and housing association). Not merely does the Government not fund council house building, it made it extremely difficult for local authorities to build them off their own back. Only this week it was revealed that Stirling Prize winning council housing – Goldsmith Street in Norwich – is subject to several Right to Buy applications only five years after it was built.
The significant discount on offer means Norwich council will have built these houses at a loss – a serious disincentive to building anything new. What’s in the budget? A capital gains tax cut for housing sales, a reversal of Right to Buy receipt retention for councils only two years after it was introduced (depriving councils of £200 million), and a £242 million grant to help build 8,000 houses near Canary Wharf.
Anyone with a knowledge of the Canary Wharf area knows those houses will be built, grant or no grant, and it’s a stone’s throw away from other major housing masterplans – 20,000 for Thamesmead/Abbey Wood, 15,000 for Swanscombe/Ebbsfleet, 13,000 for the Hoo Peninsula, 6,500 for Bexley Riverside. That £242 million for East London compares to £170 million for Wales (population 3.5 million) and £300 million for Scotland (population 5.1 million). So the Government is making it harder to build council houses during a property costs crisis and is actively making the country even more lopsided.

Goldsmith Street in Norwich – widely regarded as some of the best council housing ever built, could now be sold at a loss after a few years as regulations are weighted against councils that build

Electricity
Bigger Picture: Renewable energy has progressed from 5% market share to 45% in the last 15 years, contributing to a 70% decline in carbon emissions from the grid. This decarbonisation has been possible due to an almost complete phase out of coal use. The market share gain of renewables has largely been in the form of wind, solar and biomass. The UK has huge wave, tidal and geothermal resources but we’re yet to tap into them. We’ve decarbonised our grid more than any other country in the industrial world, this has happened despite the fact that we haven’t opened a new nuclear power plant since 1995 and since then we’ve closed 12 nuclear power plants. Earlier this year several nuclear plants went offline for maintenance, our nuclear production dipped from the normal 4.7 gigawatts to 2.5 gigawatts, but the grid coped just fine.
It’s pretty extraordinary in this context that the only significant announcement in the budget was to support Small Modular nuclear reactors (SMR). There is no working prototype of a SMR anywhere in the world yet, solar panels and wind turbines already exist and improve every year, wave and tidal electricity sectors have been prototyped to death. The UK had a world lead in wave and tidal, we’re about to be overtaken by the Faroe Islands, which plans to install 200 megawatts of tidal power in the next few years. The UK could very easily up its renewables market share from 45% to 80% (adopted policy of both Labour and Lib Dems) by doing more of the same (wind and solar) deploying new forms that have been thoroughly tested (wave and tidal), or are used elsewhere in the world (geothermal).
The latest generation of nuclear power plants in Europe are taking 15 – 20 years to build and are subject to massive cost overruns (hello Hinkley Point C). They’re such a drain on the public purse they are often supported covertly by the fossil fuels industry in order to take money away from renewables. It’s hard not to see the mystifying push for SMRs as a form of sabotage. Knowing what we know now, why wouldn’t you commit to cheap, clean, safe, homegrown renewable energy that can fulfil the needs of the grid in full over 24 hours? The same cannot be said of either fossil fuels or nuclear.

Jeremy Hunt – would rather put money into expensive, inflexible and untested SMRs rather than well-established, cheaper and safer forms of renewable power

Schools
When the RAAC in schools scandal broke in September, courtesy of a Lib Dems FoI request I wrote extensively about how we got there. School building activity oscillates between feast or famine with very little in between. At the tail end of the New Labour years we had a feast with £10 Billion a year spent on Building Schools for the Future (BSF), City Academies and the Primary Capital Programme. The school buildings budget was slashed by 62% at the start of the coalition and BSF was replaced by the Priority Schools Building Programme, a real penny-pinching scheme, reducing the budget for building a secondary school from £25 million to £17 million.
Things regressed further with the Schools Rebuilding Programme, a plan to rebuild just 50 schools a year.
Considering that there are 4,000 secondary schools in England, 50 a year means it would take 90 years to rebuild the whole estate – barely keeping pace with replacement rate. While the current Government is not responsible for the use of RAAC, that happened between the mid-50s and the mid-80s, our failure to demolish and replace the worst post-war schools means the problem is more serious than it should be.
As long as the Schools Rebuilding Programme is retained in its current form it is not nearly enough to address the needs of the schools estate. Things are likely to get worse as Munira Wilson, Lib Dems spokesperson for Education noted after the budget, “Despite the shocking state that our schools are in, the Chancellor has delivered a real terms cut to school buildings spending.” The government knows how bad the situation is in the state sector, but deliberately refuses to do much about it.

Building Schools for the Future brought new players, new designs and fresh thinking to school building, will we see such ambition and creativity in the public sector again soon?

Public Transport
Whether it’s a Prime Minister cutting half of the biggest rail line in a 100 years in HS2, a mayor in Bedford trying to stop East West rail, or councillors in Bromley trying to block the Bakerloo Line Extension, Conservatives make it clear they hate public transport. They make it more expensive every year compared to motoring and they’ll do everything they can to stop new train/tube/tram lines being built.
I guess it’s no great surprise, therefore, that the budget contained no announcements about investment in public transport. For a few years the government has put a major squeeze on London because it resents Labour, Lib Dems and Greens being so popular in the capital. That means as of now there are no major public transport schemes being progressed in earnest. There are plenty on the drawing board – West London Orbital, DLR extension to Thamesmead, Tramlink extension to Sutton, tramline extension to Crystal Palace, Bakerloo Line Extension, even Crossrail 2 – but they are all floating around waiting to be delivered. Seeing as TfL draws a lot of money from the congestion charge, business rate retention, advertising and commercial rents, if TfL can’t afford to build new lines there’s little hope for other cities in the UK.

Just imagine going on a rugby league away day from Featherstone to Otley by tram. That’s the dream – will it ever happen though?

Intriguingly plans for a £2 billion Leeds – Bradford tram system were announced this week by WYCA Mayor Tracy Brabin. Leeds has the dubious distinction of being the largest city in Europe without a metro system so I welcome the scheme wholeheartedly. We’ve been here before, however, plans for a Leeds Metro were at a pretty advanced stage before being cancelled in 2005. I remain a sceptic until full details of funding, route and construction timelines are revealed. Presumably Brabin is banking on a far greater commitment to the North than we’ve seen from the current government, although Sunak claims he’s Yorkshire through and through.
Post pandemic we’ve seen passenger numbers recover on the railways, but no backing from central government, after 25 years of significant growth in ridership up to 2020.

In conclusion

When Rishi Sunak cancelled the Northern half of HS2 with zero consultation he showed us what many people already feared, Britain is now not a serious country capable of making a plan that requires a lot of time and money and sticking to it. In resolving to build 40 hospitals but not coming close this government has also demonstrated that it’s not serious about the NHS. In having a schools building programme that falls well below what is required we have a government that’s happy to leave teachers and pupils in squalid conditions forever. A government that throws billions of £s at demand-side schemes such as Help to Buy, instead of actually being the client itself building council houses is a government that is comfortable with cripplingly high rents and entry level prices. A government that prefers to chase a nuclear rainbow when cheap renewables are available is one that is not capable of an honest cost/benefit analysis. A government that’s become extremely investment adverse is also one not capable of priming the economy and taking us out of the slump we’re in right now. I hope for better times, better infrastructure and a political elite capable of making the bold decisions that would mean we’d build ourselves towards a more prosperous Britain.

Could Britain go nuclear free?

You won’t have noticed it, but this week has been momentous for the electricity grid. Six out of nine UK nuclear power plants are offline at the moment, so nuclear power generation has dropped to a decades-long low of just 2.5GW. This compares to a norm of 4.7GW when all our plants are running normally. Nuclear generating just 2.5GW asks questions about just how valid the concept of a ‘baseload’ is, and if you need one at all, how substantial does it have to be? The fact is that if we can operate in the middle of winter, when demand is highest, on just 2.5GW, it would only take a few years to replace nuclear, either with battery storage or other forms of generation that mimic its constancy.

Pathways to phase out
In the last 15 years the growth of renewables has been pretty remarkable, up from 5% market share in 2008, to 45% market share in 2023. It’s likely that by 2030 the UK will be a renewables dominant country, up to 60 – 65% market share. To achieve this it only has to continue what it’s been doing for the last 15 years, add the same kinds of renewables – wind and solar – and add in some grid balancing measures such as battery storage and demand management.
Certainly with wind, which now has a 25% market share of UK electricity, there’s a sense we’ve only just got started. Five years ago the average capacity turbine was 3.5 megawatts, now the Dogger Bank wind farm is deploying 13 megawatt turbines. The Dept for Energy Security and Net Zero, those famous tree-hugging hippies, believes we’ll be using 20 megawatt turbines by 2040. It’s also the case that we’ve not even tapped into the areas where the best wind resource is – North of Northern Ireland and West of Scotland.

Tidal stream – constant, predictable and could be deployed all around the UK’s coast

In the past the long farm-to-shore cabling, deep water and long connections to population centres has held that back. Improvements in cabling tech and the development of floating wind farm designs means putting the biggest turbines where there is the most wind has become more likely. If not, we could still have multi-gigawatt farms out in the North Sea, Irish Sea and the South West approaches.
As a long term follower of clean tech, there is a long march to renewables dominance that is quite frankly irresistible – solar has seen a huge price drop in the last 20 years, the same goes for wind, for battery storage and for tidal stream. That’s backed up by studies that demonstrate the huge potential of certain renewables we haven’t started using yet, such as geothermal.
Last year the British Geological Survey mapped the geothermal potential of Carboniferous Limestone in detail for the first time, it estimates there is the potential to recover between 106 to 222 gigawatts of thermal heat from the rocks under the Midlands and the South. So that’s just one part of the country, and prior to that survey it was generally assumed that granite rock under Cornwall and Aberdeen had the best potential for geothermal power.

A map of Carboniferous Limestone deposits, suggests a huge untapped potential for geothermal

It’s a climate emergency, we don’t have the time
When it comes to nuclear fission, on the other hand, news of improvements are thin on the ground. Nuclear has always needed subsidy and the latest types of nuclear power plant are dogged by significant cost overruns and time delays. Hinkley Point C is expected to cost £32Bn, and Sizewell C, if it is ever built, is estimated at £30Bn.
Because plants are difficult and complex to build it takes time, and because some Brain of Britain decided it was a good idea to build particularly big nuclear power plants, they turned Hinkley and Sizewell into megaprojects – which are harder to manage and control. It will take 15 – 20 years to build these plants – for climate change purposes we simply don’t have 15 – 20 years. Renewables can be deployed as modular units which means it’s much quicker to install them and much easier to keep control of costs.

Nuclear – the flat grey block of 2.5GW at the bottom of the chart – hit a decades-long low this week

Why have governments around the world persisted with nuclear when it has been undercut by non-hydro renewables for some time now, and those forms of generation have gone from fringe to mainstream? Certain voices in the energy debate have given a lot of credit to the constancy of nuclear – essentially you turn a plant on and it produces the same amount of electricity for decades. This contrasts with the intermittency of wind, and solar only operating during daylight. The historical weaknesses of wind and solar are to an extent reduced by using bigger turbines and putting them in the best locations, and solar panel/battery combos, but it is true that output of wind and solar varies wildly.
Can other renewables counteract this? Biomass and biogas are on demand and can be fed into the same plants formerly used to burn coal (e.g. Drax), tidal and wave are predictable and constant, and geothermal can either be on demand via a twin borehole system, or constant with a closed loop.

Bloomberg suggests the low take up of heat pumps means it won’t put significant strain on the UK grid for many years to come

Coping with Net Zero demands
Replacing a relatively small amount of nuclear isn’t a problem if you weren’t attempting to reach the wider net zero goal, which involves decarbonising all road transport and heating. This will involve using electricity where oil and gas have been dominant for decades. A recent study by Hannah Ritchie shows that to electrify all road transport – cars, buses, trucks etc – you need to increase the grid by 40%. How would you do this?
The UK has the potential to tap into gigawatts more of wind, has a wave and tidal potential between 30 and 50 gigawatts, has the huge geothermal potential mentioned above and battery storage too. At the moment lithium-ion batteries are dominant, it’s expected in the next 15 – 20 years it’s possible we’ll see more cheap, low density sodium-ion batteries come onstream, these won’t need lithium, nickel or copper, and sodium is an abundant resource so the sky’s the limit in terms of battery storage capacity – could be hundreds of gigawatts if we’re committed to a big back up supply.
Other studies have shown that the electricity demand for heat pumps to replace natural gas central heating is more significant than for electric cars. While this is true, and the demand for electric vehicles and heat pumps would put a massive strain on the grid, the UK has 28 million homes and we’re installing heat pumps at a rate of only 60,000 a year.
Even if we hit the government target of 600,000 installations a year by the late 2020s, it would still take 47 years to replace every gas boiler. Either we’re going to come up with a radical plan for the 2030s and 2040s to decarbonise heat or it’s going to be a grindingly slow process going well into the mid century and beyond. That’s why Bloomberg believes heat pumps will only add 5% to the UK’s electricity demand by 2030.

A prototype of the General Electric 13MW wind turbine with 107 metre long blades – it’s now fully operational in the North Sea

Even so, we can’t be complacent about future demands being placed on the grid, we’ve decarbonised electricity hugely since 2008 by phasing out coal, that’s come in the context of falling usage since 2009 driven by improved efficiency of appliances. Can we increase the market share of renewables and increase overall production by 20 – 30 gigawatts a day?
The UK is lucky in that it can call on eight different forms of renewable power – wind, solar, hydro, wave, tidal, geothermal, biogas, and biomass – we’re uniquely well placed to go 100% renewable with a particularly strong wind and tidal resource. To do so, however, we need to prove that we’re a proper country given to long term commitments, which is what Net Zero requires. The recent decision to cancel HS2 suggests we’re not a serious country at the moment when it comes to infrastructure or Net Zero. Hopefully that will change with the election in a few months time.

Useful further reading:

Hannah Ritchie’s study into EV electricity demand:

https://www.sustainabilitybynumbers.com/p/uk-ev-electricity-demand

UCL study into the electricity demand from heatpumps:

https://www.ucl.ac.uk/bartlett/energy/news/2022/feb/heat-pumps-uk-homes-how-will-they-be-powered

Just Stop Oil: Why do they exist?

Not a day goes past without a Just Stop Oil protest, either at a major sporting event or a random location designed to cause maximum inconvenience. Because JSO is an abrasive, uncompromising organisation its existence generates more heat than light in any discourse. I want to step back from the shouting to examine JSO, and David Byrne-style ask, “How did we get here?” In the last five years JSO is one of three new direct action groups focused on the environment using shock tactics familiar to radical students in the 1960s and 1970s. Alongside Extinction Rebellion and Insulate Britain, JSO is part of a new environmental protest culture.

Boy did we drill
JSO, XR and IB are not universally popular, in fact I know so pretty mild-mannered people who’ve had their cages REALLY rattled by these new groups. Everything happens for a reason, however, and there are many reasons why these groups have been founded. If I cast my mind back to the 1980s, as a boy I was taught about the Greenhouse Effect and man-made climate change – we’d made quantum leaps in our understanding of climate science at the time. I was also taught about the concept of peak oil – reeling from the oil shock of 1973, the developed world had a lot of anxiety about the extent of oil supplies and believed peak oil was going to be reached around 2000, thereafter oil would become increasingly scarce. Pretty much all of the predictions about climate change made in the 1980s have come to pass, the predictions about peak oil, on the other hand, have been way off. Back then were keen on coal, apparently there was 200+ years worth of coal left under Britain, but we’d have to get used to diminishing oil supplies pretty soon. What actually happened? Consumption of oil, gas and coal globally rose throughout the ‘80s, ’90’s, ‘00s and 2010s. It’s possible we’ve just reached peak coal, consumption has levelled off and hinted at a decline, there’s been little discernible process with oil and gas. It turns out the world had far more oil and gas than was estimated in the 1970s.

Fossil fuel consumption: only coal shows signs of even levelling off, all of these have to decline fast

Saudi Arabia miraculously declared their known oil reserves to increase by exactly the same amount as they’d extracted for many years. A friend of mine worked at the Bahrain Grand Prix one year, rubbed shoulders with many ex-pat oil industry workers, one said to him that Saudi has hundreds of years of oil left but it won’t let on. If it did the price would crash. States in the Middle East are doing all they can to keep the status quo going – oil dependency and a price that works for them. Their desperation is understandable, most places reliant on extractive industries rarely have a second act – just witness the fishing ports in Canada still crying out for the Grand Banks to be reopened for Cod fishing, 31 years after they closed, despite the fact that stocks are still less than 10% of historical levels.

Canada is still holding out for an unrealistic revival in Cod stocks, this happens with extractive industries everywhere

On a precipice
So we’re consuming fossil fuels at a level not foreseen 40 years ago, this is due to globalisation and reserves being far greater than first thought. Our consumption will have to fall off a cliff in all three categories for us to avoid going over the 1.5ºC threshold and trigger runaway global warming. Unless an unforeseen method of carbon sequestration comes along that can lock in gigatonnes in a short space of time, our days of mass carbon consumption are over. Past performance suggests that our progress towards Net Zero, and moving towards a post-Carbon world isn’t happening nearly fast enough. Time is running out, the new environmental organisations reflect the anger, fear and urgency that many committed environmentalists feel – they haven’t been listened to, policies move in the right direction but are half-hearted. Too many people talk of being an environmentalist in aspirational terms but own an SUV and tarmac over their front garden.

What of the Green Establishment?
That we have new groups, and they are militant, says a lot about the green lobby establishment. I believe groups like Greenpeace and Friends of the Earth are caught between two stools. On the one hand they are not new and fresh with ground breaking ideas, on the other hand they’re not using their familiarity and reputation for being responsible to work with major landowners. The green establishment should have built up long term relationships with Britain’s major landowners – the Churches, the MoD, the National Trust, the Crown Estate, the RSPB etc to improve habitats on large tracts of land. If they had, we wouldn’t be the most nature depleted country in the world. This week sees an interesting development – Britain’s largest corporate landowner United Utilities embarking on the phase out of grouse shooting on its land, hopefully this land will be rewilded and cleared of lead shot. Notice no mention of any establishment environmental bodies in its decision.

Good news on habitat restoration, but was the Green establishment involved at all?

If Greenpeace and FoE were really effective lobby organisations we’d have seen 15 – 20 announcements by major landowners like United Utilities over the last few years. The green establishment has had a tendency to document and articulate the facts and figures surrounding climate change, biodiversity decline and habitat loss without working on projects to counteract any of it. What are ordinary people supposed to do if they’re not offered any solutions? I received a leaflet from a local wildlife trust that mentioned the decline of a few species of wildlife in Kent. It said nothing about buying land or starting any breeding programmes, or any achievements in habitat restoration in the past. Perhaps I’d have donated if they had a track record or a well-thought out plan, but they didn’t.
The messaging and the methods of the green lobby establishment weren’t nearly good enough, it created a vacuum and the founders of XR, JSO and IB have stepped into that vacuum.

How do we stop Oil?
Now comes the life affirming bit – transforming our habits to make fossil fuels peripheral to our lives will take some effort but technology exists to substitute just about every aspect fossil fuel use. All forms of ground transport can be electrified – cars, vans, buses, motorbikes, trucks, earth working machines. We’re not talking prototypes, fully working models exist for everything. Battery technology is moving fast, the United Bank of Switzerland, those well-known bunny huggers, stated in a technology investment report that the life cycle cost of electric cars had come down so much there was no need to buy a combustion engined car on economic grounds after 2024. Low carbon or no carbon tech is being developed for everything, the UK, for example could go 100% renewable as we could tap into all eight major forms of renewable power – wave, wind, tidal, hydro, biomass, biogas, geothermal and solar. Not every country is as lucky as us, but every inhabited place in the world could use at least one renewable. The renewable world is a far more equitable one, in terms of energy resource, than the hydrocarbon one. Net Zero isn’t just about electricity and transport, however low carbon methods are being developed for a lot of raw materials production – low carbon cement, steel, glass and ceramics. Renewable heat is one of the biggest game changers. The Ukraine – Russia war has been a major catalyst to ending Natural Gas use, we’ll see millions of heat pumps installed across Europe in the next 20 years. Many old houses aren’t suitable for heat pump installation, perhaps district heating systems will come to the fore in heritage areas. Decarbonisation will take a lot of work and lot of investment, but the technology exists, and in many cases it’s cheaper than its fossil fuel equivalent.

Germany has a very sophisticated STEM sector and a comprehensive plan for Net Zero. Germany is way ahead of the UK in many respects – more trees, more recycling, more active travel . . .

The counter narrative
This week we’ve seen a surprise result in the Uxbridge and South Ruislip by election. Labour was expected to win this, but the Conservatives held it by the skin of their teeth. It’s been interpreted as a big win for the anti-Green movement, a middle-fingered salute to the ULEZ roll out across outer London. For the right wing press this is part of a wider anti-Green agenda. For years they were against renewables, now they’re anti-EV, anti LTNs, anti active travel (remember big Auto advertises more in newspapers than big Shoe) and anti clean air measures. Never mind that IB is trying to save you money, never mind that JSO is trying to save your lungs and never mind that XR is trying to save the planet. The freedom of the Sun, the Times, the Mail and the Telegraph is to drive where you damn well want, park where you damn well want and concrete over everything, even on a flood plain. The propaganda of the newspapers must, to an extent be working. The fact is that upon implementation only 10% of cars and vans would be liable for the ULEZ charge and that figure would drop away to near zero within five years with normal replacement rates. Someone vox popped in Uxbridge said, “All my friends drive and all of them were going to be hit by the ULEZ charge,” he either has an exceptional social circle or he’s talking rubbish. Where are the mainstream politicians taking a lead and making the case for the ULEZ, correcting and clarifying all the misinformation? Again there’s a vacuum, the Conservatives exploited it as an issue even though it’s their policy and Labour have suddenly become very divided on it. This timidity in the face of a very determined right wing media smear campaign is why JSO, XR and IB exist, you can’t rely on the establishment Greens and you can’t rely on mainstream politicians to gain enough attention and stand strong at a point of reckoning.

Just Stop Oil at Wimbledon – these peaceful but disruptive protests will continue ad nauseam until more meaningful progress is made on fossil fuel dependency

What do I make of the ULEZ? I went to school in Dartford, a school friend suffered from chronic Asthma and Eczema all throughout school. I mentioned this to my best friend’s mum, who was a school nurse, and said my friend lived in Greenhithe, right on the river. She replied, “Oh I’m not surprised, all the pollution blowing out of London down the Thames estuary causes Asthma and Eczema in places like that.” The anti-ULEZ agenda played on class connotations, with people lining up to defend the working class who apparently couldn’t afford a 13-year old third hand car that would be ULEZ complaint. In my experience distinctly working class places like Thurrock, Tilbury, Pitsea, Benfleet, Dartford, Gravesend, Erith and Slade Green have been dogged by London’s pollution blowing over them for decades, with very little concern shown for their welfare. Turn ULEZ into a class issue of you want – you’ll have me and my friends in the Thames Gateway to answer to. I’m happy to make the case for all the clean tech, and pro-clean air policies, I’m aware of the right-wing counter narrative. I also know that there’s only a handful of voices in the mainstream media supporting the green agenda – Chris Packham, George Monbiot, Joanna Lumley. Even as I type this blog #ClimateScam is trending as a hashtag on twitter – measurable, provable scientific fact that is consistent with the predictions made in the last 50 years is apparently forever up for debate. That’s not good enough, until we make more progress on fossil fuel use and the green voice is louder within the cultural mainstream JSO will continue to do it in the road.

Emergency 2022

A few years ago The Economist said, ‘Since World War II every recession has been caused by financial crises and oil shocks’. At the risk of making The Economist obsolete, it pretty much nailed the major root causes of our economic problems in one sentence. I was born in 1973, I’ve lived through four oil shocks in my lifetime, and now one gas panic. All were caused by factors completely beyond the control of the UK.
The 1973 shock was caused by the Yom Kippur War and, after many years of talk, OPEC finally managed to engineer a spike in the oil price. The 1979 oil shock was caused by the islamic revolution in Iran, as despite initial assurances, Iran decided not to sell into global markets in the same way as before. The 1990 oil shock was caused by Iraq’s invasion of Kuwait, and well-founded fears about destruction of oil wells in both countries. The 2008 oil shock was caused by a rise in demand from China, a booming economy at the time, something established oil producers had not planned for. Now gas prices are through the roof due to two reasons the UK can’t control – the war in Ukraine and the mass shutdown of nuclear power plants in France, which has reversed normal flows of electricity via interconnectors. France has hitherto been an exporter of electricity, but cross-channel connectors are now sending the best part of 3000 megawatts to France from the UK.

Little Cheyne Court – part of a UK electricity sector exporting to Europe

The fact that oscillations in fossil fuel prices can cripple the global economy is well-known, but we are closer to weaning ourselves off of fossil fuel dependency than ever before. Completely ditching gas for electricity production in the UK could take another 12 to 15 years. It’s possible at the current rate of renewables installation, however. It won’t be a quick or easy process, but aside from the environmental benefits the economic prize is huge – electricity from affordable sources at stable, predictable prices. It will amount to the difference between living at the foot of an active volcano and sitting pretty in the middle of a tectonic plate.
What of the current gas panic? The UK needs short-term intervention this winter, and beyond that an overhaul of the electricity market and how it’s priced up. There is much debate about the merits of interventionist schemes, the first proposal, from my party the Lib Dems, proposes a big windfall tax on oil and gas companies and repurposing of VAT receipts from petrol/diesel (which spike when the price of fuel is high) to provide support for bills. I’ve heard arguments against the fine details, but without a major intervention there will be a huge flow of money from households, businesses and public sector organisations to electricity and gas companies. People will get into debt, be evicted, get ill or die from cold-related illnesses if household bills rise to the £5000 – £6000 a year as is predicted. Businesses could be even worse off, all non-domestic users are not protected by a price cap, and some customers are being quoted future estimates that are 1000% price rises – that makes millions of SMEs unviable all of a sudden. An intervention on the scale of the furlough scheme is required to keep the lights affordable.

Wholesale changes?

As I mentioned before we’re on a road to Net Zero, dispensing with fossil fuels so why does the price of gas still matter so much? Many years ago I switched to a 100% renewables electricity supplier because I’m committed to the cause but also I believed, naively that I’d be paying a small premium at the time in exchange for a product decoupled from the snakes and ladders nature of oil and gas markets. The wholesale electricity market means no one can escape from the jeopardy of fossil fuel instability – wholesale prices are set at the level of the most expensive form of electricity at the time. Even if you want to buy just wind, solar, biomass and hydro, it will be priced up at the same level as gas, if gas is expensive. Looking at real time data for electricity generation on a sunny, windy day sometimes renewables top out at 70% market share, it used to give me an enormous sense of well-being. That was before I knew about the wholesale market pricing mechanisms – even with a few % of natural gas in the mix we’re saving nothing.
The market is clearly weighted in favour of producers, rather than consumers and consumers will continue to be gouged by price spikes until we get rid of fossil fuels altogether, or in the medium term reform the market radically. Changing the rules of the game comes with headaches, contracts have been signed, if we move to a new pricing mechanism electricity companies will almost certainly lose out and there will be legal challenges. I can’t claim to have the answer when it comes to a pathway for market reform but this has been explored by energy and sustainability expert Michael Liebreich. If you see his latest blog you can see it proposes splitting the market into component parts, and is an excellent explainer of how the market works:

https://www.linkedin.com/pulse/uk-energy-crisis-time-split-power-market-michael-liebreich/

If I were to deviate from his proposals of a low carbon (renewables/nuclear) and fossil fuels split, to would be to keep renewables separate from nuclear, nuclear has never been price competitive – the major forms of renewables no longer need subsidy and in the case of solar and wind, are sure to get cheaper. I would like to see an aggregate price for renewables, the UK could use all eight different forms of renewable – hydro, solar, wind, wave, tidal, geothermal, biomass and biogas – all have their strengths and weaknesses and are at different stages of development. The cheapest – wind, solar and biomass – could subsidise the introduction of new forms of renewable that have been on the verge of deployment but not seen yet – geothermal, wave, and tidal.

White Knights

I can imagine, if I was a grown-up in 1973, feeling incredibly emasculated by the oil shock, which was followed by a two-year recession. The UK’s economy didn’t really recover until the late-80s, all of a sudden your quality of life, career and standard of living could be buffeted by things happening in countries thousands of miles away that were hard to understand the UK had nothing to do with. Could the gas panic be solved by an external intervention that could be as helpful as OPEC has been unhelpful to the West? I ask this question because both the US and Canada are major global producers of Natural Gas, and although many production contracts are signed off for years in advance, these countries could, if they really wanted to, turn on the taps for Europe, just like Russia can turn the taps off. On a scale of 1 to 10 how much does the US want to avoid a global recession, and avoid Europe feeling compromised by its opposition to Russia in Ukraine? At the moment no one is floating this as an option, just more piped gas from Norway and a few extra LNG tankers from Qatar and Algeria. Help from those lower volume producers isn’t going to cut it. North America has the power to help the rest of the industrial world – will it?

Those forever changes

One thing we learned in retrospect after the first oil shock is societies scouted around for alternative energy sources and energy saving measures – the shock might have precipitated permanent change but we were too lazy to bother. By the mid-80s aspirational energy changes fell by the wayside and we were back to bad habits because fossil fuels had become cheap and plentiful again – e.g. the average miles per gallon of new cars went down for about 10 years then regressed to pre-1973 levels. In the motor market, structural changes with the long-term phase out of combustion engines mean we’re set on a course of ditching oil no matter what. In the short term the Gov’t appears to be losing its nerve when it comes to electricity with Liz Truss saying she’ll ditch the green levy (this will hold up, but not eradicate investment in new renewables capacity) on bills – so that’s £150 off a £5000 bill – not a transformative difference to a household but a dent in our commitment to sustainability. The best we can hope for is Gov’t policy being a short term blip as the current administration will be voted out in 2024, and be replaced by one with one determined to make the 2022 gas panic the last fossil fuel shock we ever experience.

We’re on a road to Zero

Recently American magazine The Atlantic published a feature titled ‘How the U.S. Could Slash Climate Pollution by 2030’, it was an unusually unsatisfying piece for an otherwise high-brow publication, short on context or detail. It skirted over the when, the how, the why and the how much – the basic tenets of journalism. America has had one President after another that has been indifferent or hostile to the green agenda I guess it’s understandable their internal debate has not caught up with the rest of the industrial world yet. Joe Biden is the greenest President ever (by default), if the US ever wakes up it will probably own most low carbon intellectual property, until then the UK is ahead of the curve in terms of implementation and technology. Unlike America we’ve got a pretty good idea of how to decarbonise because we’ve been doing it for a decade or more. Let’s take a look at how we can push things forward.

Wind turbines in the North Sea – set to increase in capacity in the next decade

A Fossil Free future

Britain is on a path to net zero carbon emissions, there is a political consensus for that, the main debating points are how long it’s going to take us and how we’re going to do it. Sir Ed Davey recently stated that the Lib Dems policy is to have 80% of UK electricity generated by renewables by the year 2030. This is a stretch, but will be like moving from 4th gear to 5th gear in a car (I’ll get those combustion engine references in while people still understand them). Since 2010 renewables market share has moved from 6% to 40%, so the pace of change to get to 80% only has to increase slightly. It’s not quite as straightforward increasing the current forms of renewables to reach 80%, however, as the dominant form is wind – intermittent and unpredictable. As we phase out fossil fuels, all of which are ‘on demand’ and flexible, I.e. a thermal power plant can operate from 1% input to 100%, the reliance on electricity that is not constant – solar – or wind, which varies hugely, means we’ll have to deploy a lot of grid-balancing and storage infrastructure to keep the power flowing. Certain forms of renewable can be ‘on demand’ – biomass, biogas and geothermal, others such as wave and tidal can be constant – all of these are not deployed to scale in the UK yet but they all could be . . .

These charts show electricity usage over different timeframes, the one on the far right shows how we’ve switched from coal to renewables since 2012

Lightning strikes twice

Many people I’ve spoken to who were hold outs against the transition to renewables I believe were instinctively clinging onto a raft – Britain has been incredibly lucky in having ample coal, oil and gas resources, which we’ve exploited hugely since the start of the Industrial Revolution. Why not just keep on drilling? Aside from the climate change aspect of fossil fuels, their supporters overlook the emasculating geo-politics of hydrocarbons – there’s been four oil shocks in my lifetime, and we’re currently suffering a gas hike, all of these are down to events far beyond the UK’s control – the Yom Kippur War, the Iranian Revolution, Iraq’s invasion of Kuwait and growth of demand in China. This winter’s gas bills will be painful, but we can make it our last hydrocarbon shock if we want to.
Renewables offer good news for the world and for the UK. Instead of countries being rich in hydrocarbons or totally deficient, every country around the world, even landlocked ones will be able to tap into at least one form of renewable power. Mongolia, for example could use solar PV, heat pumps and concentrated solar power. Hopefully this will blunt the scramble for energy resources and lead to a more equal and peaceful world in the future. The UK won the lottery with fossil fuels, we also strike lucky with renewables – we can tap into all the major ones. Two forms, we’re especially rich in – wind and tidal – we’re the windiest country in Europe and have some of the strongest tides in the world in places such as the Pentland Firth. The potential is huge, but nothing is inevitable so I’ve modelled a few scenarios for 2030:

Bad case
The UK only progresses to 60% renewables, it’s still dependent on significant nuclear and gas generation. There has been increases in deployment of wind, solar and biomass but the rate of installation has slowed compared to the 2012 – 2020 period.

Average case
The UK reaches 70% renewables, nuclear and gas are reduced but still in the mix. As wind is taking up a bigger share significant grid-balancing and storage is in operation, the UK has made tentative steps to tap into new forms of renewables – biogas, wave and tidal make up a few %.

Hitting target
We took some risks, we pioneered a load of technology but we made it to 80%! As imports make up 10%, nuclear and gas are reduced to a small rump of the electricity market. Wind has been capped at around 50% of the market and the remaining 30% is made up of already established solar and biomass, but the newest forms – biogas, wave, geothermal and tidal already feed several gigawatts into the National Grid.

Hydropower was almost the exclusive form of renewable generation until 2000

For those who have got this far who are sceptical that this is possible or it’s a disruptive and costly change I would point out the following. If we had a conversation about electricity back in 2000, if you championed the existing forms of electricity and dismissed renewables it would be no surprise, aside from hydro no renewable had been deployed to scale around the world, the
rest all had to prove their worth. The increased commitment to renewables under the coalition government means that we’ve decarbonised our electricity by 67% between 2012 and 2021. The past nine years have shown that renewables can move from fringe to mainstream, they can do so very quickly and that there’s no significant increase in electricity bills by doing so. Going from 40% to 80% will be more difficult, it will cost more money. However, if you’re conservative you have to recognise the financial advisory maxim: ‘past performance is a good indicator of future outcomes’ – we can turn on the renewables tap and we can make it work, we know what that looks like. All of the forms of renewable power mentioned here are either available to deploy (wind, solar, biomass), have been proven to work in other countries (geothermal, tidal), or proof-of-concept has been shown and could be scaled up (biogas, wave, tidal). We’re not talking about end-of-the-rainbow tech like nuclear fusion.

R & D and economies of scale have taken the cost of mainstream renewables below gas and nuclear

In conjunction with COP26, the Think Tank Onward published a report ‘Thin Ice?’ This looks at changing attitudes in Britain to climate change and net zero policies. In an ideal world the UK public should have ‘got’ global warming the 1980s, climate science took a quantum leap thanks to the analysis of 140,000 years of ice core data which documented the long term carbon cycle and showed how temperatures since the start of the Industrial Revolution have gone off at a tangent (funnily enough this work was done by Soviet scientists at their Antarctic base before their oil drilling programme really took off). During the last decade, however, as we can see by the graph, acceptance of climate change has become a cultural norm.

Every age group now shows a strong majority concerned about climate change, finally!

Opinion varies slightly across the UK towards the concept of net zero, with heavily industrialised areas still less keen. What does this mean for the Lib Dems politically – pushing a strong green agenda in London and the South East is no problem, but what of our historic heartlands the South West and mid-Wales? If a selling job is possible then the potential for offshore wind, geothermal and tidal needs to be established for Cornwall and Devon, and biomass/biogas for mid-Wales. Overall I think the public has given the green light to clean energy and hope that future governments match the Lib Dems aspiration.

This map documents relative levels of support for net zero, green showing the most, purple the least

Liberals in the UK have made a huge contribution to the global environmental narrative – Lib Dems President Des Wilson’s push for cleaner air in the 1980s has prompted the worldwide eradication of lead from petrol. Sir Ed Davey’s policies in coalition have set a global template for decarbonisation in a major economy which is now being followed by the US, China and Japan, who have all set net zero policies in the last year. When the Chinese needed an expert to show them how to clean up their polluted cities they asked Sir Ed to appear on their version of Question Time – they know his work is globally significant. We are not the Green Party but we are part of the Green movement, and long may that continue.

Des Wilson – a hero to all Green Liberals

We’re on a road to zero

Recently American magazine The Atlantic published a feature titled ‘How the U.S. Could Slash Climate Pollution by 2030’, it was an unusually unsatisfying piece for an otherwise high-brow publication, short on context or detail. It skirted over the when, the how, the why and the how much – the basic tenets of journalism. America has had one President after another that has been indifferent or hostile to the green agenda I guess it’s understandable their internal debate has not caught up with the rest of the industrial world yet. Joe Biden is the greenest President ever (by default), if the US ever wakes up it will probably own most low carbon intellectual property, until then the UK is ahead of the curve in terms of implementation and technology. Unlike America we’ve got a pretty good idea of how to decarbonise because we’ve been doing it for a decade or more. Let’s take a look at how we can push things forward.

• 

Wind turbines in the North Sea – set to increase in capacity in the next decade

A fossil free future

Britain is on a path to net zero carbon emissions, there is a political consensus for that, the main debating points are how long it’s going to take us and how we’re going to do it. Sir Ed Davey recently stated that the Lib Dems policy is to have 80% of UK electricity generated by renewables by the year 2030. This is a stretch, but will be like moving from 4th gear to 5th gear in a car (I’ll get those combustion engine references in while people still understand them). Since 2010 renewables market share has moved from 6% to 40%, so the pace of change to get to 80% only has to increase slightly. It’s not quite as straightforward increasing the current forms of renewables to reach 80%, however, as the dominant form is wind – intermittent and unpredictable. As we phase out fossil fuels, all of which are ‘on demand’ and flexible, I.e. a thermal power plant can operate from 1% input to 100%, the reliance on electricity that is not constant – solar – or wind, which varies hugely, means we’ll have to deploy a lot of grid-balancing and storage infrastructure to keep the power flowing. Certain forms of renewable can be ‘on demand’ – biomass, biogas and geothermal, others such as wave and tidal can be constant – all of these are not deployed to scale in the UK yet but they all could be . . .

These charts show electricity usage over different timeframes, the one on the far right shows how we’ve switched from coal to renewables since 2012

Lightning strikes twice

Many people I’ve spoken to who were hold outs against the transition to renewables I believe were instinctively clinging onto a raft – Britain has been incredibly lucky in having ample coal, oil and gas resources, which we’ve exploited hugely since the start of the Industrial Revolution. Why not just keep on drilling? Aside from the climate change aspect of fossil fuels, their supporters overlook the emasculating geo-politics of hydrocarbons – there’s been four oil shocks in my lifetime, and we’re currently suffering a gas hike, all of these are down to events far beyond the UK’s control – the Yom Kippur War, the Iranian Revolution, Iraq’s invasion of Kuwait and growth of demand in China. This winter’s gas bills will be painful, but we can make it our last hydrocarbon shock if we want to.
Renewables offer good news for the world and for the UK. Instead of countries being rich in hydrocarbons or totally deficient, every country around the world, even landlocked ones will be able to tap into at least one form of renewable power. Mongolia, for example could use solar PV, heat pumps and concentrated solar power. Hopefully this will blunt the scramble for energy resources and lead to a more equal and peaceful world in the future. The UK won the lottery with fossil fuels, we also strike lucky with renewables – we can tap into all the major ones. Two forms, we’re especially rich in – wind and tidal – we’re the windiest country in Europe and have some of the strongest tides in the world in places such as the Pentland Firth. The potential is huge, but nothing is inevitable so I’ve modelled a few scenarios for 2030:

Bad case
The UK only progresses to 60% renewables, it’s still dependent on significant nuclear and gas generation. There has been increases in deployment of wind, solar and biomass but the rate of installation has slowed compared to the 2012 – 2020 period.

Average case
The UK reaches 70% renewables, nuclear and gas are reduced but still in the mix. As wind is taking up a bigger share significant grid-balancing and storage is in operation, the UK has made tentative steps to tap into new forms of renewables – biogas, wave and tidal make up a few %.

Hitting target
We took some risks, we pioneered a load of technology but we made it to 80%! As imports make up 10%, nuclear and gas are reduced to a small rump of the electricity market. Wind has been capped at around 50% of the market and the remaining 30% is made up of already established solar and biomass, but the newest forms – biogas, wave, geothermal and tidal already feed several gigawatts into the National Grid.

Hydropower was almost the exclusive form of renewable generation until 2000

For those who have got this far who are sceptical that this is possible or it’s a disruptive and costly change I would point out the following. If we had a conversation about electricity back in 2000, if you championed the existing forms of electricity and dismissed renewables it would be no surprise, aside from hydro no renewable had been deployed to scale around the world, the rest all had to prove their worth. The increased commitment to renewables under the coalition government means that we’ve decarbonised our electricity by 67% between 2012 and 2021. The past nine years have shown that renewables can move from fringe to mainstream, they can do so very quickly and that there’s no significant increase in electricity bills by doing so. Going from 40% to 80% will be more difficult, it will cost more money. However, if you’re conservative you have to recognise the financial advisory maxim: ‘past performance is a good indicator of future outcomes’ – we can turn on the renewables tap and we can make it work, we know what that looks like. All of the forms of renewable power mentioned here are either available to deploy (wind, solar, biomass), have been proven to work in other countries (geothermal, tidal), or proof-of-concept has been shown and could be scaled up (biogas, wave, tidal). We’re not talking about end-of-the-rainbow tech like nuclear fusion.

R & D and economies of scale have taken the cost of mainstream renewables below gas and nuclear

Public opinion latest

In conjunction with COP26, the Think Tank Onward published a report ‘Thin Ice?’ This looks at changing attitudes in Britain to climate change and net zero policies. In an ideal world the UK public should have ‘got’ global warming the 1980s, climate science took a quantum leap thanks to the analysis of 140,000 years of ice core data which documented the long term carbon cycle and showed how temperatures since the start of the Industrial Revolution have gone off at a tangent (funnily enough this work was done by Soviet scientists at their Antarctic base before their oil drilling programme really took off). During the last decade, however, as we can see by the graph, acceptance of climate change has become a cultural norm.

Every age group now shows a strong majority concerned about climate change, finally!

Opinion varies slightly across the UK towards the concept of net zero, with heavily industrialised areas still less keen. What does this mean for the Lib Dems politically – pushing a strong green agenda in London and the South East is no problem, but what of our historic heartlands the South West and mid-Wales? If a selling job is possible then the potential for offshore wind, geothermal and tidal needs to be established for Cornwall and Devon, and biomass/biogas for mid-Wales. Overall I think the public has given the green light to clean energy and hope that future governments match the Lib Dems aspiration.

This map documents relative levels of support for net zero, green showing the most, purple the least

Liberals in the UK have made a huge contribution to the global environmental narrative – Lib Dems President Des Wilson’s push for cleaner air in the 1980s has prompted the worldwide eradication of lead from petrol. Sir Ed Davey’s policies in coalition have set a global template for decarbonisation in a major economy which is now being followed by the US, China and Japan, who have all set net zero policies in the last year. When the Chinese needed an expert to show them how to clean up their polluted cities they asked Sir Ed to appear on their version of Question Time – they know his work is globally significant. We are not the Green Party but we are part of the Green movement, and long may that continue.

Des Wilson – a hero to all Green Liberals